Credit card and financial technology company Petal has raised $35m in new funding. In addition, it has spun off its B2B-focused data infrastructure and analytics subsidiary, Prism Data.

Petal says that it pioneered the use of automated cash flow underwriting in consumer credit beginning in 2016. After years of developing, refining and advancing its proprietary CashScore technology in-market, it established Prism Data. This offers other financial providers the same infrastructure and intelligence to improve underwriting decisions and expand access to credit.

Open banking: expanding access to financial services

Petal says that the spin off results in two independent, world-class financial technology companies that leverage cash flow underwriting and consumer-authorised financial information. This is sometimes referred to as open banking data. This provides products that expand consumer access to financial services. Instead of relying solely on traditional credit scores and reports, cash flow underwriting measures creditworthiness based on banking history. Metrics include consumer earning, saving, and spending trends. This advances financial inclusion by providing an effective measure of creditworthiness for the millions of consumers without accurate credit scores. It also provides a more precise assessment of creditworthiness overall for any consumer, one that is additive beyond a traditional score.

Petal uses this innovative approach to serve consumers directly. Meantime, Prism Data provides cash flow underwriting technology to financial institutions, fintechs, and other businesses. This helps them leverage open banking to build better products and make better credit decisions.

Petal founded in 2016: helping consumers establish credit responsibly

Valar Ventures led this new investment, joined by Story Ventures, Core Innovation Capital, and RiverPark Ventures, among others. The funding includes strategic investments from Synchrony and Samsung Next. This new investment will be split between Petal and Prism Data.

Petal was founded in 2016 to help people establish and build credit responsibly. It provides access to Visa credit cards, issued by WebBank. People can qualify for Petal cards even if they’ve never used credit before or have little previous credit history. To date, nearly 400,000 consumers have been approved for a Petal credit card. This includes more than 100,000 new cards approved in 2022. Petal generated more than $80m in annualised revenue last year. It reports that is on putting on a path to reach profitability in 2024.

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Prism Data’s open banking infrastructure and analytics platform helps clients improve underwriting capabilities. It minimises first-party fraud, and better manage servicing of their portfolios. Prism has seen significant traction since its launch. Specifically, it has signed more than a dozen clients and partners and completed over two dozen successful pilots. To date, Prism’s CashScore has been used to inform nearly $2bn in real-world credit originations for hundreds of thousands of consumers.

“The first wave of fintech was about inventing new approaches. We’ve seen this explosion in activity with companies testing out new models, technologies, and financial products,” said Jason Rosen, the CEO and co-founder of both Petal and Prism Data. “Not every new experiment works. But for breakthrough technologies that have proven effective, like the cash flow underwriting we’ve developed at Petal and Prism Data, the time has come to expand to the mainstream. This has profound implications for financial inclusion. We couldn’t be more excited to partner with forward-thinking industry leaders like Synchrony and Samsung.”

With the addition of this new funding, Petal has raised nearly $300m in equity capital and more than $450m in debt financing.